Nairobi city resident, James Mwangi had hoped 2020 was the year he would delve into his real estate investment plan.
Three months into the year, Kenya recorded its first case of Covid-19 .
As much as Mwangi and other thousands of investors hoped the situation would stabilise, the World Health Organisation declared a global pandemic and restrictions were imposed worldwide.
"I had to shelve my plan to construct until 2021. However, as we all know last year was not easy either," Mwangi told the Star on Wednesday.
He said the stress of getting a mortgage has forced him to look for other home ownership plans like renting to own.
Latest Central Bank of Kenya Banking sector annual data shows the pandemic had a significant negative impact on the demand for residential mortgage loans.
The report shows that demand for residential mortgages declined in 2021 due to lack of affordability as a result of job losses, reduced disposable incomes and business closures.
According to the report, there was a decline in the level of investments in real estates due the impact of Covid-19.
Banks tightened their credit standards for access to mortgage loans last year due to increased uncertainties. A number of lenders restructured and reviewed their terms for mortgage loans during the period.
Several banks according to CBK recorded increase in non-performing loans due to reduced repayment ability.
"The outstanding value of non-performing mortgage loans increased marginally from Sh27.8 billion in December 2020, to Sh28.3 billion in December 2021," the report states.
The non-performing mortgage loans to gross mortgage loans ratio was 11.6 per cent in December 2021, as compared to 12.0 per cent in December 2020.
As the country grappled with a slow down, auctions and foreclosures due to low bids failed, as potential investors shunned mortgage deals.
Even so, the overall value of mortgage loans outstanding was Sh245.1 billion in December 2021, as compared to Sh232.7 billion in December 2020.
The increase, according to CBK was due to higher values of mortgages granted in 2021.
CBK governor Patrick Njoroge projects the uptake of mortgages to be subdued but steady this year as the country gets used to operating in the Covid-19 environment.
"Investors may also shy away from the mortgages market as they take a wait-and see approach to the general elections, scheduled for August polls," Njoroge said.
However, he said mortgages market will be supported by factors including the ongoing infrastructural developments being undertaken in the country that is expected to foster the shift of individuals to locations with affordable houses.
The implementation of the affordable housing programme (AHP) under the big four agenda is also foreseen as an opportunity to boost mortgage demand.
The National Treasury in the 2022-23 budget, allocated Sh27.7 billion to support the construction of affordable housing units and social housing units through the Affordable Housing Programme.
Out of this, Sh4.6 billion was allocated to the Kenya Mortgage Refinance Company for enhancement of the company's capital as well as for lending to primary mortgage lenders.